ACCOUNTING CHAPTER 1

Current Liabilities- CLASSIFICATION

Balance Sheet. Accounts Payable and Interest Payable.

Long-Term Assets- CLASSIFICATION

Balance Sheet. Building, Land, Patent and Note Receivable from customer due in 5 years.

Current Asset- CLASSIFICATION

Balance Sheet. Cash, Interest Receivable and Inventory

Owner's Equity- CLASSIFICATION

Balance Sheet. Common Stock and 1000 Shares in Microsoft Stock.

Balance Sheet

A financial statement designed to show the ending amounts of a company's assets, liabilities, and owners' equity.

Which of the following is the ratio for calculating the current ratio?

Current Assets / Current Liabilities

What does GAAP stand for? Explain

Generally Accepted Accounting Principles

Current Assets

Something that you own. An asset likely to be used or consumed within one year.

Statement of Owner's Equity

The financial statement designed to show the changes to owners' equity during a specified time period.

Net Income

An increase in the owners' equity as a result of the firm's ongoing operations.

What is the accounting equation?

Assets = Liabilities + Owner's Equity (ALOE)

If the Debt to Equity Ratio is greater than 1 it means

The company is using more of its assets to finance its debt

Wal-Mart is an example of which of the following?

merchandising firm

The Debt to Equity Ratio is measure with which of the following?

Total Liabilities / Total Stockholders' Equity

A business owned by two or more individuals whose personal possessions are at risk if the business fails is called a:

partnership

A business owned by one person whose personal possessions are at risk if the business fails is called a:

sole proprietorship

Long-Term Liabilities- CLASSIFICATION

Balance Sheet. Note Payable (due in 10 years)

Describe the three primary ownership structures and discuss the advantages and disadvantages of each.

Sole Proprietorship, Partnership and Corporation

Current Liabilities

A liability likely to be paid or otherwise discharged within one year.

Current Ratio

A measure of company liquidity; the relationship between current assets and current liabilities. Current assets divided by current liabilities.

Return on Sales Ratio

A measure of company profitability; the relationship between net income and sales.

dept to equity ratio

A measure of company solvency and its ability to meet its long-term obligations. Total liabilities/total equity.

Revenue- CLASSIFICATION

Income Statement

Expense- CLASSIFICATION

Income Statement. Salary Expense and Interest Expense.

Which of the following would best describe the type of business Disney operates?

Service, Merchandising, and Manufacturing

Statement of Cash Flows

The financial statement designed to show the cash inflows and cash outflows of the company for a period of time.

The accounting concept requiring that an accounting system reflect information relating only to those economic events pertaining to a particular entity is the:

business entity concept

The accounting concept which assumes that, absent any information to the contrary, the business will continue into the foreseeable future is the:

going concern concept

The accounting concept which asserts that money is the common measurement unit for economic activity is the:

monetary unit concept

The accounting concept requiring that the profits of a business be determined at regular intervals throughout the life of the business is the:

periodicity concept

A law firm is an example of which of the following?

service firm